Yo, Paleoliberals! You can’t go home again! (not really)

David Ignatius reports that Charles Peters, long-time editor of the Washington Monthly and, not incidentally, one-time mentor/editor to David, has the solution to the Democrats’ electoral woes, presented in his new book We Do Our Part.

In writing the book, Charlie gets in line behind paleolibs Thomas “What’s the Matter with Kansas?” Frank and Michael “Up From Conservatism” Lind, not to mention Robert Reich and a host of others, about whom I am too lazy to be funny. The gist of all these books is that “we” need to go back to the good old days of Franklin D. Roosevelt, Harry Truman lunch-bucket liberalism when the Democrats stood up for the little guy and won all the elections, instead of all this Chablis-sippin’ bicoastal milquetoast¹ bullshit that doesn’t help anyone with less than five mil in his portfolio.

Well, I agree with about 40% of their rap, but since I live two blocks from Dupont Circle and listen to opera, when I’m not watching it, I’m not crazy about their tone. Still, they make some good points. I’ll get to those later, however, since it’s more important to talk about the ways in which we differ.

My basic point is that we can’t go back to the good old days and (point two, actually) we shouldn’t want to. The New Deal liberalism that all these dudes love so much what “Recovering Republican” Chris Ladd has shrewdly labeled “white socialism”. The original Social Security Act did not apply to farm workers (i.e., share croppers and others) or servants, cleverly excluding the majority of the black population. Eligibility for unemployment insurance was governed by state law, ensuring that lazy good for nothings (like, you know, black people) would be kept off the rolls. Employer-provided health insurance, which came in during World War II and was officially recognized as a non-taxable benefit in the early 1950s, was effectively restricted to white-collar (that is to say, white) employees and workers in union shops, found only in the North. Farm subsidies poured cash into the pockets of land owners, who were almost all white as well.

The GI Bill provided extensive benefits to veterans, but blacks were largely left out, for a variety of reasons. Thanks to substandard educational opportunities, and non-existent health care, many blacks could not meet minimum standards for service. In addition, blacks were more than three times as likely as whites to receive a “not honorable” discharge, disqualifying them from any benefits.

Blacks were defenseless against this discrimination both because of their numbers (about 15% of the population) and because most of them lived in the South, where they couldn’t vote. As blacks began to move north their economic and political situation improved, but as Democrats moved to expand “white socialism” to include everyone, the New Deal coalition cracked. Peters, Frank, Lind, et al. simply won’t recognize that the white working class stopped voting reliably Democratic when the Democratic Party leadership made clear its intention to make blacks full participants in the social programs once reserved informally but effectively for whites. The “Tea Party” was very largely born as a reaction to passage of the Affordable Care Act, which effectively turned “white socialism” into “socialism”.

Peters and the rest of the paleolibs gloss over the “white only” aspect of the New Deal reforms because what they remember is not the thirties but the fifties and sixties, when the post-war boom did float all boats, although, even then, white boats rose faster than black ones. The paleolibs believe we can go back to the way we were in a sheer act of will, despite the fact that none of the “objective factors”, to sound a bit Marxist, that led to the postwar boom exist today. After WWII, the U.S. had been starved for investment in such basic areas as housing for a good fifteen years. Consumers had spent the war buying savings bonds, and now they were ready to spend. The population was growing rapidly, and so was the education level. Above all else, the United States had the only “advanced” economy in the world–American goods were the best, and the cheapest, that you could buy.

It didn’t matter that the U.S. economy was heavily cartelized. Even though there was little real competition, U.S. goods were the best, and the cheapest in the world. It didn’t matter, very much, that they could have been appreciably better, and cheaper. The dominant companies, like U.S. Steel, General Motors, Boeing, etc. could enjoy monopoly profits, and pay monopoly wages to their unionized workers, and still provide their customers with unbeatable “bargains”.

Those happy days are gone forever. It’s true that the U.S. infrastructure could stand some sprucing up, but there’s nothing like the underinvestment that once existed. The population isn’t growing the way it did after WWII, and it probably never will. Educational attainment in the U.S. soared through the seventies, but has plateaued ever since. Most of all, of course, we are no longer a unique economy. Other nations have learned all our tricks. We can’t change monopoly prices anymore, because we aren’t a monopoly.

The paleolibs don’t want to hear this. They aren’t interested in economics. Their model of the economy is the “Walter Reuther” model. Reuther was the long-time head of the United Auto Workers. His model was simple: the bosses have an infinite amount of money. No matter how high wages and benefits go, they can always go higher.

According to Ignatius (remember him?), Charlie Peters (remember him?) praises, then faults, Bill Clinton for talking the talk in his 1992 campaign, but then not walking the walk once elected. That’s because in 1992 Bill Clinton ran more or less on a platform of white socialism, promising to “fight for the people who work hard and play by the rules” (that is to say, not lazy blacks), to “end welfare as we know it in two years” (time to go to work, lazy black people!), along with a middle-class tax cut (so the government will stop giving your money to lazy black people).

I agree with Peters’ complaint that Clinton effectively “went Hollywood” when virtually his first act after taking office was to attempt to integrate homosexuals into the military.² But, as everyone knows, the real catastrophe was the health care bill. Yes, Hillary’s incompetence was a dead weight, but the real killer was the simple fact that a great many working-class whites don’t think health care should be a right. It should, somehow, be “earned”. And they don’t want their “earned” benefits reduced or taxed to pay for the benefits of lazy black people.

The paleolibs simply can’t accept the fact that many working class whites are racist (racist and now xenophobic). They continually moan that white voters are being “tricked” by Republicans when they aren’t being offended by the politically correct shenanigans of the left. Well, there’s something to the latter, but working class whites aren’t being tricked when they vote for Republicans who talk about how much they hate big government. They know that “big government” is code for welfare and foreign aid, not for “white socialism”. Ronald Reagan, who never got tired of telling that hilarious “joke” “The scariest sentence in the English language is ‘I’m from the government and I’m here to help you’” is the same Ronald Reagan who “saved” both Social Security and Medicare (programs that he loathed) and also boasted in 1986 that his administration had given more money to farmers than all previous administrations combined!³

The paleolibs don’t know why the Democrats keep losing and they don’t know how the Democrats can start winning. Where do we agree? We agree that economic inequality in the U.S. is growing, that this is a bad thing, and that “markets”, of which I am much fonder than they, can’t solve the problem all by themselves. So what can be done, and, more to the point, what should be done?

First of all, markets can help. Specifically, liberals in enclaves like New York, San Francisco, Washington DC, et al. should lower the drawbridges and drain the moats. Forget about “smart growth” and go in for “real growth”. Get rid of rent control, height restrictions, and all (or most) of the restrictions that discourage new housing construction. Just let it happen, without planning!

Yes, you read that right. Stop being like the Old Man of Sung, who used to pull on his rice plants to make them grow faster, and just let construction happen. The cost of living will drop, and employment and wages will rise. Yes, your condo/exquisite townhouse will lose value, and you may even lose your view as well (I have a view and I would hate to lose it, but, yes, I would make the sacrifice). The heart-felt cry “That’s why I moved here in the first place!” (so don’t change anything) is not the clincher that most people take it to be. According to a paper by Chang-Tai Hsieh and Enrico Moretti, reducing geezer-friendly restrictions on housing in New York, San Francisco, and San Jose alone would boost the U.S. Gross Domestic Product by 9.5%.

Beyond that (and a few other things), we should address economic inequality directly through the earned income tax credit, discussed by Cass Sunstein here. The EITC could be greatly expanded and, as Cass explains, simplified as well. Unlike food stamps and other economic distribution programs, the EITC is both invisible and portable.

Sadly, to go back to my less than modest proposal for relatively unrestricted housing development in prosperous urban areas, I think it’s very unlikely that anal-retentive condo-canyon liberals will wise up to the fact “letting go” is not seldom the truest wisdom when it comes to economic development. Their hatred of the profit motive constantly leads them to cut off their nose to spite their face. But at least my dream would work. Which is more than I can say for the paleolibs.